I got a notice in the mail yesterday from Social Security. It says, “Good news! The economic recovery bill that President Obama signed into law in February 2009 provides for a one-time payment of $250 to Social Security and Supplemental Security Income (SSI) beneficiaries.” It says my wife will get a one-time check in the same amount. That totals $500!

Let’s see now, I guess that is fair enough, billions to the billionaires and $500 to us. After all, they have so much more than we do, so no doubt they should get more. Why our one-time payment combined will provide almost one third of my next mortgage payment!

So, thank you Mr. President and Congress for thinking of We the People, and here we thought those trillions went solely to the billionaires.

However, because their machinations affect so many investors, depositors and other businesses, they have been given a pass, saved by massive injection of federal government funds. By basic capitalist standards, this is a gross violation of business integrity, weakening the structure of our economic system. The violated principle is summarized as “Too big to fail.” One Nobel Prize winning economist called it “looting”.

The managers of such institutions knew how to take advantage of their special status. They took excessive risk for mountainous profits that would entitle them to massive bonuses if successful – or a government bailout if the investment failed. The techniques were often complicated; but some were based on inadequate reserves that purposely underestimated the financial exposure. The managers were in financial clover: heads I win, tails you lose, “Too big to fail.”

In the current crisis, the government is rescuing the managers once again, lending $700 billion as bailout money. That amount, leveraged on an accepted basis of ten to one, could have supported $7 trillion of lending capacity in a new or reorganized bank, more than enough to serve the nation’s business. We didn’t go that route; they are “Too big to fail.” President Obama has given primary responsibility for the financial crisis to Lawrence Summers, head of the National Economic Council, and Timothy Geithner, Secretary of the Treasury. The president can do better than these two conventional figures stuck in the past.

There may be an uncomfortable analogy in the position of the United States in world affairs: “Too big to fail.” Decade after decade we overspend on military equipment, organize the largest military budget the world has ever seen, enter failed military quagmires in Vietnam, Iraq and Afghanistan, yet we get token troop support from nations around the world even though their populations disapprove of our military invasions. A remarkable 737 American military bases with hundreds of thousands of American troops are situated in 130 countries, a worldwide presence that protects the governing elites on virtually every continent. Is the U.S.A. “Too big to fail” because its collapse would upset the political and military status quo all over the world?

Where does the U.S. get the money to finance its domestic and foreign errors? In large part from China, Japan, Saudi Arabia and the other countries that buy U.S. Treasury bonds in the hope that they will be redeemable despite our enormous national debt of $10,942,165,294,650.89 or roughly eleven (11) trillion dollars. China’s economy depends on the sales of goods to the U.S. The Saudis have big investments in the U.S. and depend on U.S. military power to protect them from their own people and keep the oil flowing. The Japanese are inheriting our automobile business

In spite of their mistakes, the banks and the U.S. maintain their prime positions in the world because they are “Too big to fail.” How long can it last? Their gross errors of management are too expensive, depressing profits and living standards by forcing greatly increased costs on the entire world. Adam Smith, the patron saint of capitalism, would tell the nation and the world that these arrangements are too inefficient and unstable to be continued indefinitely.